Capital Gains Tax Basics
Capital Gains Tax — CGT — is the tax on the profit you make when you sell or give away something that has gone up in value: shares, a second home, a business, or cryptoassets. It is not charged on your main home, and it is not charged on things like your car or personal belongings. This guide is deliberately brief: it gives you the rates, the allowance, and the reporting rules, and points you to GOV.UK for anything more. If you have made a gain, the official guidance is the place to work out exactly what you owe.
Capital Gains Tax in one paragraph
In 2026/27 you can make up to £3,000 of gains in the year tax-free — the annual exempt amount. Above that, gains are taxed at 18% on the part that falls within your unused basic-rate band, and 24% above it; higher and additional-rate taxpayers pay 24%. If you sell UK residential property, you must usually report and pay within 60 days.
What Capital Gains Tax is
Capital Gains Tax is charged on the gain — the profit — when you dispose of an asset. The gain is broadly the sale price minus what you paid for it, minus certain costs such as buying and selling expenses and improvements. It applies to shares and funds, second homes and buy-to-let property, business assets, and cryptoassets, among other things.
It does not apply to your main home, which is usually covered by Private Residence Relief, and it does not apply to personal possessions worth £6,000 or less, your car, or money in ISAs and pensions. Gifts count as disposals too: if you give an asset away, the gain is worked out on its market value at the time, not on what the person who receives it paid.
The £3,000 annual exempt amount
Every individual gets an annual exempt amount: the amount of gains you can make in a tax year before any Capital Gains Tax is due. For 2026/27 it is £3,000. It applies to your total gains for the year, added up across everything you dispose of, after losses. If your total gains are £3,000 or less, there is no CGT to pay.
The allowance has fallen sharply in recent years — it was £12,300 in 2022/23 — so far more people now pay CGT than used to. It cannot be carried forward: if you do not use it, you lose it. And each person gets their own allowance, so a couple who own an asset jointly can use both allowances against their shares of the gain.
The 18% and 24% rates
For 2026/27, gains are taxed at 18% on the part that falls within your unused basic-rate Income Tax band, and 24% on the rest. The basic-rate band is £37,700 of taxable income, so if your taxable income already fills it, all of your gains are taxed at 24%. Higher and additional-rate taxpayers pay 24% on the whole gain.
The same two rates apply to shares, funds, residential property, and most other assets — since 30 October 2024 there has been no separate lower rate for shares. Trustees and personal representatives pay 24%. There are special reliefs for business assets: Business Asset Disposal Relief is charged at 18% in 2026/27, with a £1 million lifetime limit.
Selling property: the 60-day rule
If you sell UK residential property that is not your main home — a second home or a buy-to-let — you must usually report the sale and pay any Capital Gains Tax within 60 days of completion. This is done through HMRC’s "CGT on UK Property" service, and it is separate from your Self Assessment return, although you also need to report the gain on the return if you file one.
The 60-day deadline catches many sellers out, because it is far shorter than the Self Assessment deadline. If you miss it, HMRC charges late-filing and late-payment penalties. If you are selling a property, find out before completion whether the 60-day rule applies to you, and have the figures — the purchase price, the sale price, and the allowable costs — ready.
Losses, and where to check
If you make a loss on an asset, you can use it to reduce your gains in the same year, and you can carry unused losses forward to later years — but only if you report the loss to HMRC, within 4 years of the end of the tax year in which the loss was made. Losses on assets that are exempt from CGT, such as your main home, cannot be used.
Capital Gains Tax is an area where the details matter and mistakes are expensive. Use GOV.UK’s guidance — "Capital Gains Tax: work out if you need to pay" and "Report and pay your Capital Gains Tax" — and consider professional advice before a large disposal. This guide is an introduction, not a calculation tool.
Sources: GOV.UK, Capital Gains Tax rates and allowances; GOV.UK, Tax when you sell property; GOV.UK, Capital Gains Tax: what you pay it on.